Fed Set to Raise Interest Rates by 0.75 Percentage Points for Fourth Time in a Row

When inflation is running high or when the economy is experiencing a major slowdown, one of the primary ways the Fed works to get things back in order is through the federal funds rate.

The Fed meets eight times per year, and during those meetings, it makes a decision about whether to adjust the federal funds rate or to leave it alone. In 2022 alone, the Fed has increased interest rates five times, with experts anticipating a sixth increase in the coming days.

With persistent high inflation, all eyes on the US central bank once again today.

The Federal Open Market Committee is expected to lift the federal funds rate to a new target range of 3.75 per cent to 4 per cent following its two-day meeting, intensifying its grip on an economy that is proving more resilient than expected in the face of aggressive monetary tightening.

The Fed’s decision to press ahead with its supersized rate rises comes amid mounting evidence that the most acute inflation problem in decades is not improving. This is despite signs that consumer demand is starting to cool, and the housing market has slowed dramatically under the weight of spiralling mortgage rates, which last week rose above 7 per cent.

2022 Rate hikes

The Fed has increased rates five times in 2022 with experts anticipating additional hikes through the end of the year.

DateIncreaseDecreaseLevel (%)
SEPTEMBER 227503.00-3.25
JULY 287502.25-2.50
JUNE 167501.50-1.75
MAY 55000.75-1.00
MARCH 172500.25-0.50

INCREASES AND DECREASES DENOTE CHANGES IN BASIS POINTS.

TABLE: IVANA PINO SOURCE: FEDERAL RESERVE

Today’s High Impact Events – Wednesday 2nd November 2022

Times below are GMT+2

14.15 – US – ADP Non-Farm Employment Change

Potential instruments to Trade: USD Crosses.

20.00 – US – FOMC Statement & Federal Funds Rate

Potential instruments to Trade: USD Crosses.

20.30 – US – FOMC Press Conference

Potential instruments to Trade: USD Crosses.

22.00 – New Zealand – RBNZ Gov Orr Speaks

Potential instruments to Trade: USD Crosses.

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